Brussels / Geneva, 28/12/2000 (Agence Europe) - The European Union has threatened to suspend its tariff concessions on American corn gluten from February 2001, if the United States maintains quantitative restrictions on imports of European wheat gluten, despite the fact that these safeguard measures have been condemned by the World Trade Organisation Appellate Body.
The decision, which was published last Friday in Geneva, "confirms once again the EU's view that safeguard measures, which, by definition, affect fair trade, can only be adopted in exceptional situations meeting the very restrictive standards set by the WTO rules", stressed European Commissioner Pascal Lamy, who observed that "this was obviously not the case with the measures adopted by the US", in June 1998. Franz Fischler, responsible for Common Agricultural Policy, noted for his part that the "US responded too readily to the protectionist instincts of a domestic industry beset with domestic problems. Its behaviour in pursuing this quota was entirely at odds with the rhetoric it so frequently directs at others". He went on to warn: "I can see no overriding public policy reason which could cause the US to hesitate to lift the quota".
Washington will have five days in which to act after adoption of the Appellate Body Report by the WTO Dispute Settlement Body probably at the end of February. The report confirms in its broad lines the decision of arbitration, given this summer (see EUROPE of 2 August). It thus establishes threefold infringement of the multilateral safeguard measures (AMS) due to: i) the generally incorrect procedure pursued to determine the causal link between the rise in imports and the injury caused and the lack of "reasoned" explanation for the impact in terms of profits and losses within US companies; ii) the unwarranted exclusion of imports of Canadian origin from the scope of safeguard measures; iii) the incorrect follow-up of WTO procedures, whereby a country which intends to take support measures must discuss its project in advance with the partner concerned with a view to "really" seeking a solution.
The measures in question had been imposed, in the form of quotas, on imports of wheat gluten of various origins, including European, in June 1998. The Union, which was the main supplier of such substances used in the milling and bakery sectors to increase the protein content of products (bread, pasta, animal feed), has since then seen its exports fall 40% and the situation of its industry on a serious decline. In addition, although the WTO specifies that such quotas, if justified, must be applied in an equitable manner to third countries, the quantities allocated to Australia were so generous that the second wheat gluten exporter had to increase its deliveries in order to gain full advantage from this. Furthermore, the quota that was somewhat restricted after this was not correctly managed, to the Union's cost. Finally, there was a presidential decision allowing replacement of the annual quota - on the eve of its opening and when the European cargoes had already left - by a quarterly quota. The European Union, whose arguments were accredited by the Appellate Body apart from several analytical points concerning the prices of wheat gluten and judicial points concerning the application of the "judicial economy", now expects that the United States will do away with such restrictions immediately. Where necessary, it may, under AMS, withdraw the American tariff concessions. A regulation has, moreover, been ready since the summer with a view to introducing, for correcting purposes, a tariff quota on US exports of corn gluten based cattle feed and to thus counter the adverse effects of the American quota on the European industry.